All entrepreneurs hope their new company will be a big hit. But how likely, in general, are small businesses to be successful?
Statistics suggest that short-term success is not terribly uncommon in the small business world. Small Business Administration estimates point to around four out of every five small businesses successfully surviving their first year.
However, long-term success is rarer. Estimates point to the five-year survival rate of small businesses hovering around one in two, and the 10-year survival rate being about one in three. So, there are a lot of small businesses that fail in the long run.
Of course, these are just general estimates. How likely a given business would be to be a long-term success depends on a lot of things. A few examples include what field the business is in, the trends and conditions in this field and local business conditions. So, when deciding what type of business to start and what business model to use, it can be important for entrepreneurs to do their research to determine what would be a good fit for market conditions and local economic and business conditions.
Another thing that has big impacts on a small business’ long-term success chances is how good of a job its owner does at steering clear of common pitfalls that can put companies at risk of failing. According to a recent analysis, the top pitfalls behind business failures are:
- Not meeting a market need
- Capital problems
- Failing to build the right team
- Being outmatched by competitors
- Pricing mistakes
In your opinion, what are the best ways of avoiding such mistakes?
Another class of mistake that could have negative impacts on a company’s chances of long-term success are errors in handling legal matters. Legal missteps can have major financial consequences for small businesses. This is one of the reasons why reaching out for skilled guidance can be such a key step for entrepreneurs to take when complicated legal issues arise for their company.